Example Public Company Limited

Example Public Company Limited

Guide to annual reportsillustrative disclosures 2018-2019

October 2018 .au

INTRODUCTION

Australian content

b | Example Public Company Limited

From implementation to disclosure

It's been thirteen years since the adoption of IFRS in Australia and now we begin to apply a new wave of financial reporting standards with AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments effective 1 January 2018, and AASB 16 Leases, effective from 1 January 2019. Our financial statements will look different in many areas to what we have seen in the past. Given the wide ranging impacts of these new standards we expect considerable focus from users of financial statements and ASIC in understanding these accounting changes and also assessing whether entities have included all the required disclosures.

Now that the revenue and financial instruments transition date has come and gone, it's time for companies to explain these accounting changes to users. In addition to transition disclosures (see Note 5) the new standards have significantly enhanced ongoing disclosures. In particular these include disclosures for the disaggregation of revenue, information about nature and timing of the satisfaction of performance obligations under AASB 15 (see Note 8) as well as enhanced disclosures for impairment and hedge accounting under AASB 9 (see Note 32).

Many companies are now working through their analysis of the possible impacts that the adoption of AASB 16 will have on the financial statements as well as broader issues such as the impact on covenant compliance, impairment testing and key ratios. Accordingly, we have updated Note 46, with illustrative disclosures to highlight a more detailed assessment of the possible impacts in the period of initial application. Similar to the run up to the adoption of AASB 15 and AASB 9 we consider that regulators will expect transition plans to be highly progressed by the date of transition with disclosures made by companies to demonstrate this. A summary of other newly effective accounting and regulatory requirements for this period, including those mentioned above, are set out on our "What's new?" page.

Once again, due to Australia's close alignment to IFRS, we have made minimal changes to the source document prepared by our international colleagues and have built the Australian-specific disclosures around that International guide. The navigation bookmarks and links will assist you to identify the changes and disclosures you need.

We trust you will find Example Public Company Limited Guide to annual reports ? illustrative disclosures a useful reference in your annual report preparation. For further information on the contents of this publication or for assistance in the application of the new accounting standards, please contact your KPMG professional.

Andrew Yates National Managing Partner ? Audit, Assurance and Risk Consulting

Primary statements

Notes

Appendices

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

INTRODUCTION

Australian content

Primary statements

| c

How to use this guide

The purpose of this publication is to help you in preparing annual financial reports in accordance with Australian Accounting Standards (AASBs), which are International Financial Reporting Standards (IFRS) developed by the International Accounting Standards Board (IASB) as adopted by the AASB for for-profit entities.

It illustrates one possible format for financial statements for a fictitious multinational corporation involved in general business (Example Public Company Limited).

This publication relates to both annual financial years ending 31 December 2018 and 30 June 2019 and reflects standards and interpretations that have been issued by the AASB as at 15 August 2018 and that are required to be applied by an entity with an annual period beginning on 1 January 2018 and 1 July 2018 (`currently effective requirements'). The early adoption of standards or amendments to standards that are effective for annual periods beginning after 1 January 2018 (`forthcoming requirements') is not illustrated.

Although it is not exhaustive, this guide illustrates the disclosures required by IFRS for one hypothetical corporation, merely for illustrative purposes and, as such, largely without regard to materiality.

This guide should not be used as a boilerplate template. The preparation and presentation of financial statements require the preparer to exercise judgement, in terms of the choice of accounting policies, the ordering of notes to the financial statements, how the disclosures should be tailored to reflect the entity's specific circumstances, and the relevance of disclosures considering the needs of the users.

Navigating this guide

If you are using this guide for the first time: Given Australia's close alignment to International Financial Reporting Standards (IFRS), a substantial portion of Example Public Company Limited has been based on the illustrative disclosures publication prepared by our international colleagues based on `pure' IFRS.

However to illustrate additional Australian specific disclosure and alternative presentation methods that are commonly used in Australia, a separate section, has been included, just before the main financial statements. A clear cross-reference to the Australian section is included on affected international pages.

Australian specific disclosure is shown in section one Australian content

Illustrative disclosure based on IFRS is shown in section two Guide to annual financial statements.

This hypothetical corporation (the `Group') used in this publication has been applying IFRS for some time ? i.e. it is not a first-time adopter of IFRS. If you are preparing your first set of annual financial statements, that include an explicit and unreserved statement of compliance with IFRS, you are considered a first time adopter of IFRS. For more information on adopting IFRS for the first time, see Chapter 6.1 in the 15th edition 2018/19 of our publication Insights into IFRS.

If you are recurring user of this guide: We direct you to our What's new page, which contains a summary of all new or revised accounting standards and regulatory changes that have been reflected in Example Public Company Limited since the previous edition of this guide and references to other resources in the guide that you might find useful to your financials statement preparation for the current period.

Materiality considerations

Preparers need to take care not to reduce the understandability of an entity's financial statements by obscuring material information with immaterial information or by aggregating material information that is different by nature or function. Individual disclosures that are not material to the financial statements do not have to be presented ? even if they are a minimum requirement of a standard. Preparers need to consider the appropriate level of disclosure based on materiality for the reporting period

Specific guidance on materiality and its application to the financial statements is included in paragraphs 29?31 of AASB 101 Presentation of Financial Statements. In December 2017, the AASB issued Making Materiality Judgements (AASB Practice Statement 2) which provides practical guidance on how to apply the concept of materiality in the preparation of financial statements.

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Notes

Appendices

INTRODUCTION

Australian content

d | Example Public Company Limited

Further KPMG guidance

We also have a number of accompanying tools and publications that can be used to assist you in the preparation of your annual report and helping you to report financial information in the most meaningful way. These materials and more, can be accessed from our Financial statements preparation site, which contains a number of other valuable references and resources.

Keeping in touch

Follow `KPMG IFRS' on LinkedIn or visit ifrs for the latest on IFRS.

Whether you are new to IFRS or a current user, you can find digestible summaries of recent developments, detailed guidance on complex requirements, and practical tools such as illustrative disclosures and checklists.

KPMG Australia Financial Reporting and Accounting Standards

KPMG Global IFRS Institute

Australian Topics

Accounting & Reporting Webinars

Trust through transparency integrated reporting

Australian Reporting Updates

Better business reporting

Standards on Issue

Revenue

Financial Instruments

Leases

Primary statements

Notes

Appendices

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

INTRODUCTION

Australian content

Primary statements

| e

This page is intentionally blank

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Notes

Appendices

f | Example Public Company Limited ? illustrative disclosures

Contents

From implementation to disclosure

b

How to use this guide

c

Further KPMG Guidance

d

What's new?

2

References and abbreviations

4

Australian content

5

Corporate governance statement

7

Directors' report

10

Notes to the consolidated financial statements

40

Directors' declaration

49

ASX additional information

50

Voluntary tax disclosures ? Part A

53

Guide to annual financial statements

56

Consolidated statement of financial position

58

Consolidated statement of profit or loss, and

other comprehensive income

60

Consolidated statement of changes in equity

62

Consolidated statement of cash flows

64

Notes to the consolidated financial statements

66

Appendices

229

INew standards or amendments for 2018-19

and forthcoming requirements

229

IIPresentation of comprehensive income ?

Twostatement approach

231

IIIStatement of cash flows ? Direct method

233

IVExample disclosures for entities that early

adopt IFRS 9 Financial Instruments (2014)

233

VOther disclosures not illustrated in the

consolidated financial statements

234

IFRS Readiness for 2018

241

Acknowledgements

242

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Notes

Example Public Company Limited ? Illustrative disclosures | 1

Basis of preparation

66 Other information

197

1. Reporting entity

66 37. Loan covenant waiver

197

2. Basis of accounting

66 38. Operating leases

198

3. Functional and presentation currency

66 39. Commitments

199

4. Use of judgements and estimates

66 40. Contingencies

199

Performance for the year 5. Changes in significant accounting policies

68 68

41. Related parties 42. Subsequent events

200 203

6. Operating segments

82 Accounting policies

204

7. Discontinued operation

89 43. Basis of measurement

204

8. Revenue

91 44. Correction of errors

205

9. Income and expenses

98 45. Significant accounting policies

206

10. Net finance costs

99 46. Standards issued but not yet effective

227

11. Earnings per share

100 Australian content

40

Employee benefits

102 1. Reporting entity

40

12. Share-based payment arrangements

102 2. Basis of accounting

40

13. Employee benefits

105 3. Functional and presentation currency

40

Income taxes

109

26. Capital and reserves 47. Reconciliation of cash flows

41

14. Income taxes

109

from operating activities

42

15. Adjusted EBITDA ? Not used in Australian

48. Auditors' remuneration

43

context

116 49. Deed of cross guarantee

44

Assets

117 50. Parent entity disclosures

47

16. Biological assets

117

17. Inventories

121

18. Trade and other receivables

122

19. Cash and cash equivalents

123

20. Disposal group held for sale

124

21. Property, plant and equipment

126

22. Intangible assets and goodwill

129

23. Investment property

134

24. Equity-accounted investees

135

25. Other investments, including derivatives

137

Equity and liabilities

138

26. Capital and reserves

138

27. Capital management

142

28. Loans and borrowings

143

29. Trade and other payables

150

30. Deferred income/revenue

151

31. Provisions

152

Financial instruments

154

32. Financial instruments ? fair values

and risk management

154

Group composition

189

33. List of subsidiaries

189

34. Acquisition of subsidiary

190

35. Non-controlling interests

194

36. Acquisition of NCI

196

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INTRODUCTION

Australian content

2 | Example Public Company Limited

What's new?

Example Public Company Limited Guide to annual reports ? illustrative disclosures (Example Public Company Limited, or the guide) takes account of the impact of the following new or revised accounting standards and regulatory changes:

Effective for the first time for an annual reporting period ending:

31 December 2018 30 June 2019

Australian Accounting Standards

Share Based Payment Transactions (Amendments to AASB 2)

Transfers of Investment Property (Amendments to AASB 140)

Annual Improvements to AASBs 2014 -2016 Cycle

(Amendments to AASB 1 and AASB 128)

Foreign Currency Transactions and Advance Considerations (IFRIC 22)

AASB 9 Financial Instruments

AASB 15 Revenue from Contracts with Customers

Amendments and Clarifications to AASB 4 Insurance Contracts

Throughout the guide, major changes since the previous edition of this guide are highlighted as follows:

For changes effective for the first time for BOTH annual reporting periods ending 31 December 2018 and 30 June 2019, by a double black line running down the left margin of the text. The double black line in the left margin also highlights major changes in terms of what was illustrated in the 2018 edition of this guide.

Amendments to Australian Accounting Standards

Newly effective standards

AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers are effective for the first time for entities with an annual reporting period beginning on or after 1 January 2018. Applying the new standards is expected to significantly affect the disclosures included in the financial statements and are illustrated in Note 5, Note 8 and Note 32. The Group has no other transactions that would be affected by the newly effective standards or its accounting policies are already consistent with the new requirements.

Primary statements

Notes

Appendices

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo and are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

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